http://www.nytimes.com/2014/09/06/upshot/the-jobless-rate-the-worst-benchmark-except-for-all-the-others.html?ref=economy&abt=0002&abg=0
The main idea expressed in this article is that although we have hit an unemployment rate of roughly 6.1%, we may be misinterpreting its meaning.
A growing number of people who have been unemployed but avidly looking for work, have given up and are no longer in the labor force. Because they have left the labor force (Working and looking for work), they are not included in the calculation of our unemployment rate, even though they are not employed.
The participation in the labor force has been decreasing, and many are pessimistic about whether it will recover. It has been suggested that we move to wage growth as another means of tracking the labor market, but for now, Janet Yellen and her colleagues still believe the participation rate will rebound.
I think it would be interesting to see if wage growth rate is actually better than the unemployment rate. It would make sense because in a good economy wages should go up because output has increased. Meaning each employee is worth more. It also makes sense if the economy was in a recession or depression because wages would either go down or stay the same because output has decreased. I would also like to see the figures on how many people have left the workforce since 2008. That could be a really good indicator on how well the economy has done since then.
ReplyDeletehttp://www.bloomberg.com/news/2014-05-02/workforce-participation-at-36-year-low-even-as-more-jobs-beckon.html
ReplyDeleteChristopher, this article discusses some of the points you made in your comment. What I found particularly interesting is that, while the workforce participation is now at a 36-year low, more baby boomers are actually returning to the workforce, with their participation rate of those above the age of 65 rising to 18.9% in April of this year.